some suggestions & cautions - web.utk.eduweb.utk.edu/~rmc/presentations/rm group.pdf · eastman...

The RM Group, Inc. Knoxville, TN Copyright 2012 Copyright 2014 1

Asset Management (or Maintenance Management Re-branded?)

Some Suggestions & Cautions

November 2015 Copyright 2015

Sources: 1) ISO 55000-1,2,3; 2) PAS 55; 3) Asset Management by Ron Moore

in Uptime Magazine


ISO 55000 provides a management framework for an asset management system

It does not provide guidance for managing assets for optimal value over their life. In fact, it specifically excludes guidance and specs

An asset is ANYTHING that adds value to the business, not just equipment (Don’t forget - People, processes, procedures, patents, etc. are all assets!)

But, most people reading ISO 55000 are maintenance managers, and focus on physical asset management, i.e., maintenance

Asset Management – Some Cautions


So, maintenance managers are developing the (physical) asset management strategy

Many use “asset management” and “maintenance & reliability” almost interchangeably

This is a mistake. It is not sufficient. Most asset management strategies are simply maintenance management strategies “re-branded”

So, what’s missing, or poorly addressed? (my comments focus on manufacturing, so analogies must be developed for other businesses, e.g., railroads, hospitals, etc.)

Incidentally, Asset management strategy must be led from the top



Does your asset management plan include: Business requirements of the assets over the coming

5-10 years? Production’s role? Design/capital projects’ role? Procurement/Stores’ role? Maintenance’s role? Disposal? Or other roles, based on the organization? Clearly define each role in managing the assets,

adding value, minimizing losses & risks, & de-commissioning

All must be aligned to the business strategy/goals


The RM Group, Inc. Knoxville, TN Copyright 2012 Copyright 2014 5 5

Asset requirements over the coming 5-10 years? Is the business is closing?

Is the business being sold?

Is the business stable, with little or slow growth?

Is the business growing rapidly?


Each business scenario requires a different asset management strategy

Each requires a different staffing and personnel development strategy

Each requires a different capital allocation strategy


What is Production’s role in each scenario? In data from 100’s of plants, production controls ~70-90%

of all production losses (value); maintenance controls very little value!

So, production plays a key leadership role day-to-day, and strategically!

Production determines its role in each scenario for supporting business objectives and creating value!

For example, if the business is growing rapidly, production takes the lead in eliminating production losses, (think OEE) before requesting capital investment for growth

Maintenance is a support function in helping identify and minimize the losses and capital requirements



What is Design/Capital Projects’ role? Before new capital investment, production must

assure excellence in the use of current assets, e.g., taking OEE from 60% to 80%

Some capital may be required to support maximizing current performance, but no major capital is required

Capital projects works with production & maintenance to develop policies & procedures for applying lowest life cycle cost principles, vs. lowest installed cost

Including an asset registry and maintenance strategy in all capital projects

Data from large companies indicate that 3 months of production are lost during startup; maintenance costs are 25-50% higher in the first two years after startup



What is Procurement/Stores’ role? Procurement must apply the concept of Total Cost of

Ownership – only ~25% is price! Much more focus must be given to the ownership

costs, e.g., ease of operation & maintenance, energy consumption, ergonomic issues, quality/ease of supply

Stores must balance the cost of working capital against risk of loss – risk of production losses and risk of maintenance inefficiencies due to lack of spares

Stores must make it easy to do maintenance, while controlling working capital and overhead costs



What is Maintenance’s role? Most of you are all over this, e.g.: Asset registry and bill of material Equipment criticality ranking and equipment strategy,

including risk management where appropriate Work management, planning, then scheduling Condition monitoring PM, including addressing specific failure modes Operator care tasks Skilled trades competencies Precision maintenance; quality build plans; etc.



What about disposal? Residual value of the assets, if any? Disassembly costs? Abandon in place? Decontamination costs? Hazardous waste disposal costs? Transportation costs? Other costs?



If your asset management strategy is maintenance led (most are): You’ll be “pushing on a rope” You’ll only do more efficiently work that you

shouldn’t be doing at all Your ability to “add value” will be limited Maintenance is an enabler for adding

value, much like Accounting, HR, etc. – and they are absolutely essential!



Finally, and most importantly, a strong asset management program must address: Effective Leadership/Sponsorship (vs. permission) Alignment of the Entire Organization to the Strategy

(See ISO 55000, 2.4.3)

Teamwork among Functional Groups to the Strategy Systems Level Thinking (“Line of Sight” in ISO 55000) Changing the culture - People do want to change:

IF given compelling reasons, IF there’s something in it for them for the changes, IF they participate in creating the changes!

“Culture eats strategy for breakfast” Peter Drucker



Strong leaders will make sure all this happens! According to Terry O’Hanlon, a member of the

ISO 55000 committee: “Financial asset management and ISO 55000 asset management are the same!” I agree!

Asset management is about managing ALL the assets – people, processes, and equipment - minimize risk, while assuring financial success!

It’s about value creation! (not just managing equipment)




Is this enough?

Reliability Web’s Asset Management Model:

The focus!


Minimum unit cost of Production

Design Store Operate

Defects Defects Defects

Unneeded Work - $$

Asset Utilization &

Necessary Work

The Reliability Process

Root Causes Rate Losses & Downtime

Source: In Cooperation with Andrew Fraser, Reliable Manufacturing Assoc.

Buy

Defects

Install/ Startup

Defects

Maintain

Defects

(Life Cycle Cost) (Cost of Ownership) (“Like a Store”)

(With Discipline) (With Care) (With Precision)

(note where most defects occur)

Injuries (& Env. Events)

Doing better Mtce will not contribute much to Reliability


Reliability Based Operations

Reliability cannot be driven by the maintenance organization. It must be driven by the operating units, …and led from the top. Charles Bailey, VP of Operations Eastman Chemicals (Retired)

To expect maintenance to “own” reliability is like expecting the mechanic at the garage to “own” the reliability of our cars. Ron Moore


Of all production losses from ideal (AU/OEE), ~2/3rds are NOT equipment related; ~1/3rd are, but most of these are Ops driven; Only ~ 10% of losses are Mtce driven JIPM: 70% of eqpt. failures are preventable by operators

Equipment RelatedLosses-MaintenanceEquipment RelatedLosses- OperationNon EquipmentRelated Losses

Source: Author experience; Similar findings reported by BASF-UK,

Eastman Chemicals, Whirlpool, and Borg-Warner-US

Changeovers, rate/quality losses, raw material, market demand, production planning, etc.

The RM Group, Inc. Knoxville, TN Copyright 2012 Copyright 2014

Reliability and Safety

18


Most all organizations say safety is a top priority

They have policies, standards, processes, systems, etc. to support this

They are committed to enforcing these policies

Safety is a Top Priority

19


Safety Policy Statement All injuries are preventable

No task is so urgent that it cannot be done safely

Management must provide a safe work place

We are each responsible for preventing injuries

Everyone is empowered to stop unsafe behavior

20


If executives were truly committed to safety…

They would be committed to reliability, and would have similar policies, standards, processes, and systems

They typically are not, and do not Consider a typical sampling of the data

Reliability and Safety Relationship

21


Injury Rate v. AU/OEE over Time - Company A

15

35

55

75

95

115

135

1 5 9 13 17 21 25 28 33 37 41 45 48 5390

95

100

105

110

115

120

Injury Rate

OEE/AU

Month

OEE

/AU

- % o

f Bas

e

R = 0.80 R2 = 0.64


Correlation of Corrective & Reactive Work Orders with Injury Rate – Plant No. 1

R = 0.827R2 = 0.684

100

150

200

250

300

350

400

6000 8000 10000 12000 14000

Tota

l Inj

urie

s pe

r Yea

r


Correlation of PM & PdM Work Orders with Injury Rate – Plant No. 1

R = 0.955R2 = 0.911

100

150

200

250

300

350

400

4000 6000 8000 10000 12000 14000

Tota

l Inj

urie

s pe

r Yea

r


The More Disciplined Your Maintenance, the Fewer Injuries you have

R = 0.95R2 = 0.90

0

1

2

3

4

5

60 70 80 90 100Inju

ry R

ate

(n

orm

aliz

ed to

a b

ase

num

ber)


And, is More Cost Effective - Reliability Index v. Production Unit Costs (As reliability increases, costs decrease)

R = 0.632R2 = 0.40

50

60

70

80

90

100

110

120

30 40 50 60 70 80 90

Prod

uctio

n C

osts

$/U

nit

26


Defects & Process Errors Reduce Reliability and Increase Hazards

20,000 defects

6,500 repair work orders

10 losses

Major Incident

Numerous Minor Process Errors

Process Safety Breach

Loss of Containment

Major

Accident

Operational Discipline is essential to eliminate defects and process errors

Copyright 2015


From the data we should conclude:

Safety is everyone’s responsibility &

Reliability is everyone’s responsibility

28

The RM Group, Inc. Knoxville, TN Copyright 2012 Copyright 2014 29 29

Establish a Policy Linking Reliability and Safety

All injuries, are preventable

No task is so urgent that it cannot be done safely,

Management must provide a safe, workplace

We are each responsible for preventing injuries,

Everyone is empowered to stop unsafe, behavior A reliable plant is a safe plant, is a cost effective plant!

and failures,

and failures

& unreliable,

and reliably

and reliable

The RM Group, Inc. Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 30

If you truly believe in Safety, then

Reliability is a MUST

to minimize the risk of injuries, costs, and environmental incidents

(Should be given comparable executive attention

as any high-powered consulting recommendations)

The RM Group, Inc. Knoxville, TN Copyright 2012 Copyright 2014 Copyright 2014 31

Strategy for Implementation


Strategy for Implementation Led from the top- executive sponsorship

is essential (Permission is not sponsorship, or leadership! Active engagement is essential)

Production & Maintenance Partnership- Clear goals and expectations must be set, and reasonably achievable

Shared KPI’s for reliability & business results must be in the annual management appraisal and bonus system

Shop floor engagement process, including cross functional teams, structured improvement time, and a support structure


Keeping all this in mind,

Is your asset management strategy…

Maintenance Management Re-branded?

Or Holistic Asset Management?


Appendix - Contact Details Ron Moore Managing Partner The RM Group, Inc. 12024 Broadwood Drive Knoxville, TN 37934 Tel/Fax: 865-675-7647 Email: [email protected] Ron Moore is the author of Making Common Sense Common Practice-

Models for Operational Excellence, 4th edition; of What Tool? When? A Management Guide for Selecting the Right Improvement Tools, 2nd edition, both from MRO-Zone.com; and of Business Fables & Foibles, and Our Transplant Journey: A Caregiver’s Story, both from Amazon.com, as well as over 50 journal articles. Ron’s latest book, Where Do We Start Our Improvement Program? is scheduled for release in September, 2014.

some suggestions & cautions - web.utk.eduweb.utk.edu/~rmc/presentations/rm group.pdf · eastman...

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